SKN | National Bank Raises BMO Price Target While Maintaining Sector Perform

Key Takeaways

• National Bank of Canada raised its price target on Bank of Montreal to C$205 from C$186.
• Sector Perform rating maintained, signaling a balanced risk-reward view.
• First-quarter profit beat expectations, supported by lower loan-loss provisions.
• Record revenue reported across all business segments.

National Bank analyst Gabriel Dechaine increased his valuation benchmark following stronger-than-expected first-quarter results.

Despite the higher target, the Sector Perform rating suggests the analyst sees limited relative upside from current levels, even after the earnings surprise.

BMO reported adjusted profit of C$2.55 billion for the quarter ended January 31, up from C$2.29 billion in the prior period. Adjusted earnings per share came in at C$3.48, exceeding the consensus estimate of C$3.20.

Revenue Strength Across Segments

The bank delivered record revenue across all business divisions. Wealth management and capital markets were standout contributors, with adjusted earnings rising 16% and 11%, respectively.

Lower provisions for potential loan defaults also supported profitability, indicating stable credit performance during the quarter.

Diversified revenue streams continue to underpin BMO’s earnings resilience.

U.S. Optimization Efforts Gain Traction

Following its acquisition of Bank of the West, BMO has taken steps to streamline U.S. operations.

The bank reduced exposure to underperforming loans, closed select branches, and repositioned its portfolio toward higher-margin commercial lending. These measures contributed to 13% growth in adjusted net income within the U.S. segment.

Management expects balance sheet optimization efforts to be largely complete by the end of next quarter, positioning the bank for positive commercial loan growth in the second half of the year.

Canadian Operations Remain Steady

In Canada, earnings increased 8% as the bank focused on deposit growth and expansion into new lending areas.

CEO Darryl White emphasized that stronger U.S. economic momentum relative to Canada could provide additional tailwinds, particularly given BMO’s cross-border footprint.

Outlook

The raised price target reflects improved earnings visibility and operational momentum. However, the maintained Sector Perform rating indicates that much of the near-term strength may already be reflected in the stock.

Investors will likely watch for sustained loan growth, margin trends, and continued credit stability as BMO progresses through its balance sheet optimization phase.

For confidential discussions regarding North American bank valuation strategy, cross-border earnings sensitivity analysis, and portfolio positioning within diversified financial institutions, our senior advisory team is available for discreet consultation tailored to institutional and cross-border mandates.